Providio’s Daily Futures Market Commentary for Feb 15, 2012

This is a discussion on Providio’s Daily Futures Market Commentary for Feb 15, 2012 within the Trading Software forums, part of the Commercial category; Currencies: 15Feb The action for the last week or so has shifted the previously positive anti-Dollar trade the other direction. ...

Currencies: 15Feb The action for the last week or so has shifted the previously positive anti-Dollar trade the other direction. Unless an atypical move is due, the FX markets should stay in the current positive Dollar/negative other bias for several weeks. Volumes seem to be holding up strongly adding further validation to the price action’s implications

Today’s US economic releases were a mixed bag and indications point to somewhat anemic US growth going forward. Obviously there is financial turmoil in Europe with the Greek debt situation and other PIIGS going forward.

Aussie: 15Feb After a quick test of higher action failed in early AM trading, the negatively biased technicals continue to offer evidence of downward pressure. The flattening 200-day moving average lies well below at 1.0352, but served as solid resistance throughout the end of last year.

Seasonal Snapshot: An upward bias lasts until March.

British: 15Feb More negative action as the negative technical bias gained steam. Closing in on Oversold. Since peaking at the falling 200-day Moving Average on Feb 8, it has offered a classic falling trend profile; lower highs and lower lows. After the sustained 19-session rally, the sell off is likely to become a material affair. Currently testing support at the 38.2% retracement of the move higher; at 15654. If this fails, the next “major” support is near the 50% retracement at 15571 and also the 15550 round number.

Seasonal Snapshot: Choppy consolidation in all three patterns with a modest upward bias into Mar.
Canadian: 15Feb The Loonie’s rally is in doubt as well as its Momentum and Trend indicator have both turned to a negative bias. With its RSI near 50, if this is indeed o a move lower, it has plenty of room to run down. Very Low Volatility leaves this market rather comfortable with the proceedings.

Today’s action both tested (and failed ) at the 21-day trend indicator (now falling) and the rising 200-day Moving Average (it held). The day’s candlestick shows as a doji, with a negative bias. The falling Trend has started picking up strength in the last 2 days.

If the still falling 200-day Moving Average doesn’t offer enough support to the Loonie, look for lower action chart structure. Testing the par level is a key area. If it fails to hold it should settle in as a material resistance area.

Seasonal Snapshot: The 15 and 30-year patterns are modestly negative until Feb. 16. The 5-year is positive until Feb 16.

Dollar Index: 15Feb Our Momentum indicator went positive joining Trend in adding more upward bias. As the downward move was almost a month in length, this move is likely to be sustained. Pretty high current RSI does offer a potential headwind, but the swings in FX RSIs have been wide so it may not slow down for a while.

The 200-day Moving Average is still below, but is rising.

Seasonal Snapshot: The 15yr breaks away from consolidation and rallies again until the end of Feb.
Euro-FX: 15Feb The Euro Momentum indicator went negative today and has joined Trend in offering positive bias. RSI is approaching Oversold, but with the recent wide swings in FX RSIs it may not offer supportive headwinds for some time. A sustained break below our noted 1.3200 support level targets an area just above 1.3000. A break below may signal a return of the negative trend and would put the mid-January lows at 1.2627 in jeopardy.

The 200-day Moving Average remains well above and falling.

Seasonal Snapshot: A decidedly weak tone until the end of Feb.

Yen: 15Feb Yen’s negative slide continues and it’s likely going to test the December lows near 127. Getting quite Oversold. Trend’s negative bias is strengthening. Watch the Oversold conditions here and the fact that the market has not been able to sustain a sell off of this magnitude for more than a day or two. Protect profits if short.

Seasonal Snapshot: All three patterns are negative, but the 15yr is decidedly more so until late Feb.

Energies: 15Feb Continued mounting tensions in the Middle East, with today’s news that Iran has cut off 6 European countries from their Crude Oil. Today’s DOE report of drop in Petroleum stocks was a further positive dynamic.

Seasonal Snapshot: All 3 Petroleum contracts are in a period of more positively biased action until the end of February.

Petroleum: 15Feb Today’s higher Crude Oil and products action was not supported by higher Volume. Material rallies have been the story of late. Heating Oil’s recent strength is showing cracks as its secondaries are rolling over. Gasoline, despite rising supplies and plunging demand continues to grind higher.

Crude’s Overbot conditions continue to build.

All the 200-day Moving Averages are either turning to head higher or flattening from their falling direction. All Petroleum Volatilities are Low /Very Low which speaks to exploring option purchase strategies.

NatGas: 15Feb Despite recent cooler forecasts, fear of a growing glut of NatGas had it under pressure today. Trend strength is rather weak indicating indecision in direction.

The last 2 week’s action looks like a developing bearish symmetrical triangle. March’s support lies at 2.34-2.35. A break below that level target prices near 2.00.

Seasonal Snapshot: A modest upward bias is only sustained until 04Feb and then its down again, especially in the 15&30yr patterns until late Feb.

Equities: 15Feb Last night’s probe higher proved to be only fleeting, as all three markets we track settled back into lower trading ranges throughout the US session. Volume was stronger on the downdrafts.

Our Momentum indicator remains negative in both the S&P & Dow futures. We remind readers that the last time this happened, at the end of January, it only lasted for a couple days. Additionally, although all three backed off the previous period of overextension, which peaked around 25Jan, it was only a rest period in the uptrend that has been in place since mid December.

Our Volatility measure in all three markets is starting to perk up a little, after plumbing to well below average levels the last week of January. This should make option purchases a more attractive component in trading strategies for now.

Seasonal Snapshot:

S&P and Dow: Choppy consolidation with a mildly weaker tone in the 15&30 yr patterns until they start to work higher at the end of Feb. After some modest strength, the 5yr pattern displays a material downdraft 19Feb-03Mar.

NASDAQ: Consolidation with a weaker tone in all three patterns until an upswing in the 5yr commences in mid-March.

Corn: 15Feb The negative bias, which has been coming as a slow shift over the last week or 2, continues. Today’s action, while in keeping with the general direction, seems consolidative, with materially lower Volume. If this recent action sets up as consolidation before a move higher, watch the action as it approaches 670.

The 200-day Moving Average remains falling in a shallow pattern.

Seasonal Snapshot: As the Pattern gets short in duration the bias gets more positive reflecting recent years’ commodity boom conditions. All 3 patterns are in stable patterns until the end of Feb.

Soybeans: 15Feb Soybeans are continuing their march higher. Still Overbot and all Technical indications point to higher action.

Fundamental dynamic from South American production is likely a driver of higher prices. As of this writing, March had an early test of the important 1250 level and has bounced nicely.

The 200-day Moving Average is still falling but the Mar contract is approaching this level (today at 1287 ½). It has been below this level since September 2011.

Seasonal Snapshot: All three patterns display an upward bias until the end of Feb.
Wheat: 15Feb Wheat remains in a generally negative technical picture similar to Corn just a bit more negative. Additionally, while Corn executed a longer shift to negative bias, Wheat peaked on Feb 1 and immediately followed that with a much more negative pattern. It is closing in on Oversold.

Volume is down significantly.

The 200-day Moving Average is still falling.

Seasonal Snapshot: All 3 patterns have a short-term peak on Feb. 9 and then enter a downward bias until Feb 21.

Interest Rates: 15Feb We leave our recent analysis in place as today’s action was rather benign.

As we have noted, both Bonds and 10yr have been “swinging” around their 21-day moving averages since November: In addition, we conducted further analysis today using Linear Regression analysis. Both of their general price directions are higher, the Bonds on a much shallower basis than the 10-Year. Given the Fed’s policy statements, this is not unexpected. We provide this as context for any Treasury positions or anticipated positions

A continuation of the 21-day Moving Average pattern targets Bonds at 145-16; 10yr at 132-16 in the next week or two. These levels are also consistent with what our Linear Regression analysis shows.

Seasonal Snapshot: The 5-year heads lower until mid-Feb. The 15 and 30 yr patterns head generally sideways until the contract changes in late Feb.

The 2yr displays broad, volatile consolidation well into March.

Metals:

Gold: 15Feb Gold essentially continued its negative bias today. The market probed higher overnight, then sinking back by late in the session, finding some support at the rising 21-day moving average. Our Momentum, Trend, and RSI are all pointed lower. RSI is not Oversold, so there is plenty of room to run to the downside. 1705 sets up as a significant support level. It’s near last Friday’s low, is a price the market broke out above, and was a minor support level back in November.

We stress caution; the fact that many of these markets have not been able to sustain moves for very long makes us wary.

Our Volatility measure has reinstated its downward bias and is still Low. Explore option purchases, both for protecting current positions and also for entering new ones.

Seasonal Snapshot: Divergence between the 30yr (down) and the 5&15yr patterns (up) until the end of Feb.
Copper: 15Feb Copper is still voting “no” to any resolution of the Greek debt troubles, falling back to below the 200-day moving average (now 381.60) it has used as a fulcrum after retaking this level 26Jan. Our Trend, Momentum, and RSI are all headed lower. Watch the action as it approaches 3.7750. Volume continues to trend lower since the spike on its break out to the upside on 09Fed… disappointing for the bulls.

Seasonal Snapshot: A month-long rally in all three patterns lasts until 05Mar.

Softs:
Cocoa: 15Feb Attention turns to the May contract. A test of our noted upside resistance at 2400 is upon us as of this writing. A break out above 2475 would mark fresh yearly highs. Trend-based traders may see some more upside, as our Momentum just turned positive and our Overbought measure is still middling.

Otherwise the negative dynamic related to global demand may re-impose itself and more negative action is a more likely outcome.

Seasonal Snapshot: 5 and 15 year patterns are modestly bullish until Feb 17. 30 year pattern is generally sideways until mid-March. All 3 patterns are negative from Feb 17-20.

Coffee: 15Feb Yesterday’s profit-taking and long liquidation continued today, sending the May contract to just above $2 psychological support. It is holding that level, as of this writing.

Volume is returning but the market is the most Oversold we have seen it since late September when it began the prolonged consolidation between 2.25 and 2.50.

Seasonal Snapshot: All 3 Patterns trend higher until Feb 23.

Cotton: 15Feb More positive action that may bring Cotton in line with a positive Seasonal tendency. Pay attention to your own technicals for an indication of any further reversal. Our rising Rate of Change is stemming the negative tide for now. Watch to see if it can pull Momentum positive. Volume is creeping back on this recent strength, which undercuts a potential bear flag formation. Now off our Oversold list, as of this writing.

Seasonal Snapshot: A powerful Trend higher until approximately March 4. Pay attention to near-term fundamentals.

Sugar: 15Feb Both our Trend and Momentum are now tipping negative. Watch for a test of the lower end of its consolidation range near 2250. This market has plenty of room to run down as RSI is still at 55 but now falling.

The 200-day Moving Average is now gently rising and has capped any rallies going back to the beginning of the year.

Seasonal Snapshot: Modestly higher bias until Feb 19 or so. At that point as we shift to later months than March, the market will enter a period of generally negative bias until mid-April.